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| All life insurance policies fall into 2 categories |
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Definition
| Temporary and permanent protection |
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| Term life insurance is temporary protection because it only provides coverage for |
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Definition
| A specific period of time |
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| term life insurance is also known as |
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Definition
| pure life insurance. it provides what is known as pure death protection |
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| Term policies provide the greatest amount of coverage for |
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Definition
| the lowest premium compared to all other forms of insurance |
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| with term life, what type of benefits or cash value are available |
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| . No cash value or other living benefits or available |
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| Based on how the face amount changes during the life of the policy, There are 3 basic types of term coverage available |
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Definition
| Level, decreasing, or increasing |
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| Regards to the type of term purchased, the premium |
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Definition
| Remains the same level during the life of the policy |
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| Depending on the type of term insurance, only _____can change |
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Definition
| Only the amount of the death benefit can fluctuate |
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| When selling, converting or renewing the term policy. How is the premium determined |
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Definition
| Using the attained age (age at the time of the transaction) |
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| If a level premium policy, the premium will be based upon |
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Definition
| The insured's attained age at the time of renewal |
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| What is the term policy called where death benefit remains level and the policy may be guaranteed renewable without proof of insurability, but the premium increases annually According to the attained age |
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Definition
| Annually renewable term (ART) |
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| Decreasing term policy features a death benefit that |
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Definition
| Decreases each year of the life of the policy |
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| A decreasing term policy is usually purchased to |
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Definition
| insure a debt such as a mortgage |
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| A decreasing term policy is not renewable since the benefit is 0. But it can be |
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Definition
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| Increasing term features the death benefit that |
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Definition
| Increases in a specific amount for a percentage of the original amount |
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| And increasing term policy is usually use to fund |
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Definition
| riders for cost-of-living increases or premium refunds |
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| Most term policies are renewable, convertible or |
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Definition
| Renewable and convertible |
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| The renewable provision allows a policy to renew without |
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Definition
| Evidence of insurability. The premium however will be based on the insured's current age |
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Term
| The convertible provision allows the insured to |
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Definition
| convert to a permanent policy without evidence of insurability; but based on the insurance attained age (current age) |
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| Permanent Life insurance policy that builds cash value and |
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Definition
| Remains in effect for the life of the insured or to age 100. As long as the premiums are paid |
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| The most common type of permanent life insurance is |
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Definition
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| A Whole life policy endows at age |
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Definition
| 100; which means the cash value accumulated premiums will equal the face amount of the policy |
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| Premiums for whole life are usually ___________ than term life |
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Definition
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| The premium, death benefit, and cash value characteristics for whole life are |
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Definition
| Premium is a level, the death benefit amounts is level and the cash value is paid out to the policy owner |
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Term
| Whole life policies have a living benefit in which the cash value can be |
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Definition
| Borrowed against father policy is in effect; or the policy owner can receive the cash when the policy is surrendered |
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Term
| In a whole life policy, the cash value, also called the non-forfeiture value, does not begin to accumulate until |
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Definition
| The 3rd year of the policy and it grows tax-deferred |
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Term
| The 3 basic forms of whole life insurance are |
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Definition
| Straight, limited pay and single premium/pay |
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Term
| Straight life, also referred to as continuous or ordinary whole life is the basic policy where the policy owner pays |
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Definition
| The premium throughout the life of the insured or until they reach age 100 |
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| Straight life premiums are |
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Definition
| The lowest of the 3 whole life forms |
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Term
| Limited pay whole life is designed so the premium |
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Definition
| Is paid up after certain period of time. For example, LP-65 is paid up at age 65; and 20–paid life is a in full after 20 years |
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| In a limited life policy, the policy is paid in a shorter amount of time, so premium is |
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Definition
| Higher, and the cash value builds up faster |
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| A single premium whole life policy is paid |
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Definition
| In a single lump sum payment, and generates an immediate cash value |
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| An adjustable life insurance policy is the best of both worlds because it can assume the form of either |
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Definition
| Term or permanent life insurance. It starts off to meet their present needs. As their life changes, they can make adjustments |
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| There are 3 adjustable options in adjustable life insurance policy |
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Definition
Increase/decrease the premium or the premium paying period
increase/decrease the face amount
change the period of protection |
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Term
| With an adjustable life policy owner has the option of converting from |
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Definition
| Whole life to term and vice versa |
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| When making changes to the adjustable life policy, increasing the death benefit for converting to a lower premium policy will usually require |
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Definition
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| With an adjustable life policy, the policy owner can pay additional premiums in order to |
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Definition
| To accumulate greater cash value or shorten the premium pay period |
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| Unlike other whole life policies, the cash value of an adjustable life policy only accumulates |
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Definition
| From the premiums paid are greater then the cost of the policy |
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Term
| Universal life, which is also known as flexible premium adjustable life, is what type of life policy |
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Definition
| Interest sensitive life product |
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Term
| In a universal life policy. The policy owner has the flexibility of |
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Definition
| Increasing the amount of premium paid into the policy; and decreasing it again later |
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Term
| With universal life, the policy owner can skip a payment if |
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Definition
| the cash value is enough to cover the premium |
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Term
| Since the premium can be adjusted in universal life, the policy owner has an option to pay 2 different types of premiums: |
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Definition
| The minimum premium or the target premium |
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Term
| The minimum premium is the amount keep the policy |
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Definition
| In force for the current year. This makes the policy perform as a annually renewable term product |
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Term
| The target premium is the recommended amount to be paid on the policy in order to |
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Definition
| Cover the cost of the insurance protection and to keep the policy in force throughout its lifetime |
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Term
| Universal life is not only a flexible premium policy, but it is also an interest sensitive policy which means |
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Definition
| The policy has 2 components: an insurance component and a cash account |
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Term
| The insurance component of a universal life policy is always |
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Definition
| Annual renewable term insurance |
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Term
| Universal life offers two death benefit options |
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Definition
| Option a is the level death option and option B is the increasing death option |
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Term
| Under the death benefit option a for universal life, the death benefit remains level while the |
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Definition
| Cash value gradually increases, thus lowering the pure insurance in the insured's later years |
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Term
| The option a death benefit shows an increase in the death benefit at a later point so that |
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Definition
| The policy will comply with the statutory definition of life insurance |
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Term
| According to the IRS statute from December 1984. There must be a specified |
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Definition
corridor or gap between the cash value and the death benefits in a life insurance policy.
If this corridor is not maintained, policy is no longer defined as a life insurance and loses its tax advantage |
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Term
| under option B, the increasing death benefit option in universal life, the death benefit includes the annual |
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Definition
| Increase in cash value, so eventually the death benefit gradually increases year by the amount of the cash increase |
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Definition
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| under option B, the increasing death benefit option in universal life, the death benefit includes the annual |
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Definition
| Increase in cash value, so eventually the death benefit gradually increases year by the amount of the cash increase |
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| Which type policy offers level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to = face amount at age 100, and living benefits which include policy loans |
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Definition
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| Which type policy offers level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to = face amount at age 100, and living benefits which include policy loans |
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Definition
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